With the Covid-19 outbreak largely contained in Malaysia, AllianceDBS Research Sdn Bhd (AllianceDBS Research) expects Sunway to benefit from a gradual economic recovery, particularly its leisure and hospitality businesses.
“Its diversified business portfolio with a proven track record will continue to underpin its long term earnings visibility, leveraging on its superior integrated ‘build-own-operate’ model,” The Borneo Post quoted AllianceDBS Research as saying.
“While Sunway’s hospitality and leisure businesses will be severely impacted by the Covid-19 pandemic and the nationwide lockdown imposed since 18 March, Malaysia is already moving toward a recovery phase.”
The research house noted that the country has been reporting low daily new cases.
As such, AllianceDBS Research believes Sunway’s weak performance for the second quarter of 2020 is only temporary, and would rebound strongly in the second half.
And while Sunway’s 54%-owned Sunway Construction Bhd witnessed a more subdued construction space and operating environment in the last two years, the construction unit still has a RM5.4 billion outstanding order book as of March, providing the company a three-year earnings visibility.
AllianceDBS Research does not expect the short-term disruption brought by the Covid-19 outbreak to affect the company’s earnings beyond 2020.
Meanwhile, the research house is bullish that the group’s healthcare division will continue its growth considering its outstanding track record as one of Malaysia’s best medical centres.
Currently, it is aggressively expanding its portfolio to add more medical centres and replicate the success of Sunway Medical Centre in Sunway City KL.
AllianceDBS Research said the healthcare division will expand from its existing 636 beds to over 1,500 beds in the next four years.
It expects Sunway’s healthcare division – which contributed RM60 million pre-tax profit during the financial year 2018 on RM460 million revenue – to have a separate listing once the business matures.